Supplemental Materials for Financial
Results of the Third Quarter of the Fiscal
Year Ending January 2023

Computer Engineering & Consulting Ltd.
December 9, 2022
© Computer Engineering & Consulting Ltd. All rights reserved.

Contents

Operating Results for the Third Quarter of
the Fiscal Year Ending January 2023

Full-Year Earnings Forecast for the Fiscal
Year Ending January 2023

© Computer Engineering & Consulting Ltd. All rights reserved.

1

2

Year-on-year comparison of 3Q results◼ ICT investment by customers became active mainly in the DX area and for security measures, and businessnegotiations are increasing in spite of the remaining impact of the semiconductor shortage.
◼ Net income reached a record high in 3Q with gains on sales of investment securities recorded in 2Q toextraordinary income.
(Unit: Million yen)
FY ending Jan. 2023
FY endedJan. 2022
Results for 3Q

Results for 2Q

Results for 3Q

Year-on-year
amount of change

Year-on-year rateof change

Net sales

33,52723,47835,288

1,760

5.3%

Operating income

3,043

1,969

3,277

234

7.7%

Operating income
ratio

9.1%

8.4%

9.3%

0.2

－

Ordinary income

3,081

1,988

3,296

215

7.0%

Ordinary income
ratio

9.2%

8.5%

9.3%

0.2

－

Net income*

1,798

3,495

4,381

2,583

143.7%Net income ratio

5.4%

14.9%

12.4%

7.1

－

* “Net income” signifies “Net income attributable to owners of parent” (the same applies hereinafter)* From the beginning of the first quarter of the fiscal year under review, the Company has applied the “Accounting Standard for Revenue Recognition,” etc. Its impact in the first nine months of the
fiscal year under review includes the following: net sales increased 180 million yen, and operating income, ordinary income, and profit before income taxes grew 21 million yen, respectively© Computer Engineering & Consulting Ltd. All rights reserved.

3

Quarterly results◼ Net sales(100 million yen)518

Net sales

480

500
380

400
300

452

359

252

352

335

245

234

224

200
126

126

118

114

100
0
1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

FYE Jan/2021

FYE Jan/2020

1Q

2Q

3Q

4Q

FYE Jan/2022

1Q

2Q

3Q

FYE Jan/2023◼ Operating income/Operating income ratio(100 million yen)

15.0%

80
59

Operating income

50

60

9.3%

42

10.0%

44
40

26

28

37

30

32

22
20

16

15

⚫ In the manufacturing area, net sales increased
year on year as ICT investments recovered.
⚫ Inquiries from customers in the distribution
industry continued to be steady.
⚫ The system development business remained
steady with continued demand for DX.
⚫ The infrastructure construction business isgradually improving despite the continuous
semiconductor shortage.
⚫ The security field was favorable thanks to strong
demand.
⚫ In Group companies, net sales remained thesame year on year.

5.0%

19

13

9

0

⚫ Increase in income due to higher net sales.
⚫ Income improved through productivity
improvement activities.
⚫ Although the impact of unprofitable projects in theprevious fiscal year is continuing, great effort wasmade to prevent opportunity loss.

0.0%
1Q

2Q

FYE Jan/2020

3Q

4Q

1Q

2Q

FYE Jan/2021© Computer Engineering & Consulting Ltd. All rights reserved.

3Q

4Q

1Q

2Q

FYE Jan/2022

3Q

4Q

1Q

2Q

3Q

FYE Jan/2023

4

Year-on-year comparison by business segment◼ In the digital industry business, both net sales and operating income increased as business performance
improved backed by the recovery in ICT investments by customers in the manufacturing industry.
◼ In the service integration business, net sales increased as demand related to the promotion of DX and security
was favorable despite the continuous impact of unprofitable projects and semiconductor shortage.
(Unit: Million yen)
Results for
3Q of FY ended Jan. 2022
Operating income
Rate of return

Net sales

Results for
3Q of FY ended Jan. 2023
Net sales

Amount of change
Rate of change

Operating income
Rate of return

Net sales
Rate of change

Operating income
Rate of change

Digital Industry
Business

11,634

2,158
18.5%

12,309

2,805
22.8%

674
5.8%

647
30.0%

Service Integration
Business

21,892

3,481
15.9%

22,978

3,440
15.0%

1,086
5.0%

(41)
(1.2%)

Corporate expenses－(2,596)－(2,967)－(371)

33,5273,043
9.1%

35,288

3,277
9.3%

1,760
5.3%

234
7.7%

Total

* The impact for the first nine months of the fiscal year under review due to the application of the “Accounting Standard for Revenue Recognition,” etc. includes the following: in the digital industry business, net
sales increased 33 million yen, and segment profit grew 4 million yen. In the service integration business, net sales increased 146 million yen, and segment profit was up 17 million yen.
© Computer Engineering & Consulting Ltd. All rights reserved.

5

Digital Industry Business◼ Net sales◼ Operating income/operating income ratio(100 million yen)(100 million yen)

200

30%
38

40
174
162

150

50

33

28

122

86

84

44

77

42

21

19

20

82

25%

28

20%

25

123

116

23%
31

30

130

100

158

15%

19

18
14

10

40

39

9

10

10%
10

8

5%
0

0
1Q

2Q

3Q

4Q

FYE Jan/2020

1Q

2Q

FYE Jan/2021

Business category

3Q

4Q

1Q

2Q

FYE Jan/2022

Net sales
weather chart

3Q

4Q

1Q

2Q

FYE Jan/2023

3Q

0%
1Q

2Q

3Q

FYE Jan/2020

4Q

1Q

2Q

3Q

FYE Jan/2021

4Q

1Q

2Q

FYE Jan/2022

3Q

4Q

1Q

2Q

3Q

FYE Jan/2023

Points for 3Q

Smart factory⚫ Inquiries on products and development projects increased due to more customers working on
production DX on a company-wide basis.

Connected services⚫ The mobility field was steady, and control projects saw an increasing trend for businessnegotiations.

Chubu district⚫ ICT investment made by major customers remained steady with favorable net sales andincome.

Nishinihon district⚫ Business negotiations in the existing system development field were favorable in addition to
product services.

© Computer Engineering & Consulting Ltd. All rights reserved.

6

Service Integration Business◼ Net sales(100 million yen)
400

◼ Operating income/operating income ratio(100 million yen)
344
317

300

250

200

100

293

237

165

229

45

37

26

34

25

14

34
10%

24

14

20

14

5%

9

10
0

15%
15%

40

20

77

74

50

41

30

152

146

83

54

50

218

161

82

20%

60

0

1Q

2Q

3Q

4Q

FYE Jan/2020

1Q

2Q

FYE Jan/2021

Business category
Service integration

Platform architect
Group companies© Computer Engineering & Consulting Ltd. All rights reserved.

3Q

4Q

1Q

2Q

3Q

FYE Jan/2022

Net sales
weather chart

4Q

1Q

2Q

3Q

FYE Jan/2023

0%

1Q

2Q

3Q

FYE Jan/2020

4Q

1Q

2Q

3Q

FYE Jan/2021

4Q

1Q

2Q

3Q

FYE Jan/2022

4Q

1Q

2Q

3Q

FYE Jan/2023

Points for 3Q⚫ The whole system development business continued to be steady with the acquisition of
new projects, thanks to the fair wind of demand for DX promotion in the government
and the private sector.
⚫ Inquiries from government and public offices and local governments regarding thesecurity field continued to be active, and the infrastructure construction business wason a recovery trend despite the continuous impact of the semiconductor shortage.

⚫ The business environment including nearshore development was favorable andremained steady.
7

Progress of focused business◼ Focused business generally progressed as planned toward full-year targets
Results and forecast of net sales in focused business(100 million yen)

200

Focused business

Point

150

Production and logistics
solutionsTime tends to be required before sales arerecorded due to an increase in customers working
on production DX on a company-wide basis.

Mobility services

Business negotiations related to clouddevelopment continued to be steady.

Services in cooperation
with Microsoft Japan

There were many business negotiations such as
on customer relations management (CRM) andlow-code development due to the promotion of DX,
and progress exceeded the plan.

Migration services

Backed by the growing demand for DX, a shift tothe cloud and out-of-support programming
language support were active.

Security services

Business negotiations on security services(consulting, deployment & monitoring) continued tobe active.

DX cloud platform

Cloud service functions for our services areundergoing development, design, implementation,and verification with actual equipment.

120
106

DI
*

93

100

60
50

0
2022-4Q 2023-1Q 2023-2Q 2023-3Q 2023-4Q 2024-4Q 2025-4Q
Net sales results
Net sales plan

Full-year
targetResults
for thefirst ninemonthsSI
Net sales
Net sales

12 billion yen*

9.3 billion yen

Progress
rate

77.7%

*DI: Digital Industry Business, SI: Service Integration Business© Computer Engineering & Consulting Ltd. All rights reserved.

8Orders received/orders in hand
◼ The business environment was favorable, and orders received and orders in hand have been steadily increasing
Digital Industry BusinessChanges in orders received(100 million yen)
500

478

Changes in orders in hand(100 million yen)
200

462

Service Integration Business

167

405
400

365

161

352

161

150
126

124

300

121

240
200

78
316

127

240

45

100
83

82

300

158

26

31

104
28
27

121
111
28

31

114

33

31

110

111

1Q

2Q

33

30

133
279

50

179

152

86

31

117

143

146
44

230

41

111

101

231

131
100

112

263

143

81

74

80

77

1Q

2Q

3Q

4Q

88

83

89

84

1Q

2Q

3Q

4Q

102

86

0

0
1Q

2Q

3Q

FYE Jan/2021

4Q

1Q

2Q

FYE Jan/2022

3Q

4Q

1Q

2Q

3Q

FYE Jan/2021

FYE Jan/2023

FYE Jan/2022

3Q

FYE Jan/2023(Unit: Million yen)

Total

Results for 3Q of
FYE Jan/2022

Results for 2Q of
FYE Jan/2023

Results for 3Q of
FYE Jan/2023

Year-on-year
rate of change

Orders received

35,20626,301

40,561

15.2%

Orders in hand

12,16414,30916,76037.8%© Computer Engineering & Consulting Ltd. All rights reserved.

Status of orders received
Business negotiations in the systemdevelopment business continued to be steadyand business negotiations in the infrastructure
construction business saw an increase.
9Year-on-year comparisons of sales by industry(Unit: Million yen)

Year-on-year comparisons
Results forResults for
3Q of FY ended Jan. 3Q of FY ending Jan.
Amount of change Rate of change
2022
2023

Manufacturing industry
Component ratio

14,87644.4%

15,557
44.1%

681

4.6%

Communication and information
service industry
Component ratio

8,161
24.4%

9,475
26.8%

1,313

16.1%

Financial industry
Component ratio

3,971
11.8%

3,416
9.7%

(555)

(14.0%)

Distribution industry
Component ratio

1,817
5.4%

2,278
6.5%

461

25.4%

Government and public offices
Component ratio

1,692
5.0%

1,281
3.6%

(411)

(24.3%)

Other industries
Component ratio

3,007
9.0%

3,279
9.3%

271

9.0%

Total

33,527100%

35,288
100%

1,760

5.3%

© Computer Engineering & Consulting Ltd. All rights reserved.

Points by industry[Manufacturing industry]
ICT investment by existing customers
remained steady[Communication and information service
industry]
Growth through DX promotion support andcollaborative business[Financial industry]
Down from the previous year due to adecrease in business negotiations in theinfrastructure construction business[Distribution industry]
Demand for security and logistics services
increased[Government and public offices]
The security business performed well, but
net sales decreased mainly due to a change
in periodic business negotiations ininfrastructure construction
10Balance sheet compared with the end of the previous fiscal year
(Unit: Million yen)Comparison with the end of theprevious year
End of January End of October
2022
2022
Amount of change

Rate of change

34,06034,710650

1.9%Cash and deposits

22,43023,977

1,547

6.9%

Non-current assets

11,087

10,981(106)(1.0%)

6,567

6,614

47

0.7%

244

272

28

11.6%

4,275

4,093

(181)

(4.3%)

9,411

9,287

(123)

(1.3%)

Current liabilities

8,310

8,632

321

3.9%

Non-current liabilities

1,100

655

(444)

(40.4%)

Total net assets

35,73636,404667

1.9%

Total liabilities and net assets

45,14745,691544

1.2%

Current assets

Property, plant and equipment
Intangible assets
Investments and other assets

Total liabilities© Computer Engineering & Consulting Ltd. All rights reserved.

Point[Assets] Increased
Grew due to increase in cash anddeposits[Liabilities] Decreased
Fell due to decrease in long-term
accounts payable–other[Net assets] Increased
Up due to increase in retained
earnings in spite of a decrease
due to the acquisition of treasury
stock
Equity ratio
78.7% → 79.5%

11

Unprofitable projects and future plans◼ Response to unprofitable projects progressed as planned
 Customer acceptance test and briefing for users completed. Project is progressing smoothly.
 As of December 9, general testing process and documentation work including preparation ofcustomer manual is underway.
 No change in cutover schedule.
◼ Background and future plans
FY ending Jan. 2024

FY ending Jan. 2023

1Q

2Q

3Q

• Identification of defects in thetesting process• Delivery date extended to
February 2023
• Recording of additional allowance• Quality assessment
complete• Further quality
enhancement to mitigate
future risks• Customer acceptance test
• Briefing for users

4Q• Pre-test – General test
• Migration to the
production environment

1Q• Estimated cutover in
February 2023

* For the background in the previous fiscal year, please refer to the Supplemental Materials for the First Quarter of the Fiscal Year Ending January 31, 2023, which were
published on June 10, 2022.
* The schedule in and after the fourth quarter of the fiscal year ending January 2023 may change depending on the progress of the project.
© Computer Engineering & Consulting Ltd. All rights reserved.

12

13

Year-on-year comparison of full-year earnings forecasts◼ Full-year earnings forecast remains unchanged, and we will aim at meeting our target byclosing deals that tend to increase
Results for FY
ended Jan.
2022

Forecast for FY ending Jan. 2023
Amount of change

Rate of change(Unit: Million yen)

Results for
3Q of FY ending
Jan. 2023

Progress rate

Net sales

45,22048,000

2,779

6.1%

35,288

73.5%

Operatingincome

4,206

4,500

293

7.0%

3,277

72.8%

Operatingincome ratio

9.3%

9.4%

0.1

－

9.3%

－

Ordinary income

4,282

4,540

257

6.0%

3,296

72.6%

Ordinary income
ratio

9.5%

9.5%

－

－

9.3%

－

Net income

3,039

5,200

2,160

71.1%

4,381

84.3%

Net income ratio

6.7%

10.8%

4.1

－

12.4%

－

© Computer Engineering & Consulting Ltd. All rights reserved.

14

Full-year earnings forecasts and points◼ Net sales(100 million yen)

Net sales

600
480

359

400

234

224

126

⚫ No change to the earnings forecast.
⚫ Business negotiations are increasing due torecovery in ICT investment made by major
customers.
⚫ No change also in sales strategy. Promote
expansion of sales of products and services inthe businesses focused on.
⚫ Develop new business negotiations by fully
utilizing the synergies generated by the
integration of business areas and regions.

352

335

245
200

480

452

118

114

0
1Q

2Q

3Q

4Q

FYE Jan/2021

1Q

2Q

3Q

4Q

FYE Jan/2022

1Q

2Q

3Q

4Q

FYE Jan/2023◼ Operating income/operating income ratio(100 million yen)

Operating income

60

15.0%
50
37

30

40

45

42

32

10.0%

26
22
20

15

19

5.0%

13
9

0

⚫ Quickly bring unprofitable projects under control
as the highest-priority issue, and invest
management resources intensively.
⚫ Aim to improve the rate of return and promoteacquisition of highly profitable businessnegotiations.

0.0%
1Q

2Q

FYE Jan/2021

3Q

4Q

1Q

2Q

FYE Jan/2022© Computer Engineering & Consulting Ltd. All rights reserved.

3Q

4Q

1Q

2Q

3Q

4Q

FYE Jan/2023

15

Full-year earnings forecast by business segment(Unit: Million yen)

Resultsfor FY ended Jan. 2022

Net sales

Digital Industry
Business

15,897

Service Integration
Business

29,322

Corporate
expenses

Total

OperatingincomeRate of return

3,153
19.8%

4,546
15.5%

Forecast
for FY ending Jan. 2023

FY ending Jan. 2023

Amount of change

3Q progress rate

OperatingincomeRate of return

Net sales
Rate of change

OperatingincomeRate of change

17,100

3,900

1,203

747

22.8%

7.6%

23.7%

30,900

4,600

1,578

54

14.9%

5.4%

1.2%

Net sales

Net sales
progress rate

Operatingincomeprogress rate

72.0%

71.9%

74.4%

74.8%

－

(3,493)－(4,000)

－

(507)

－

－

45,2204,206

48,000

4,500

2,780

294

9.4%

6.1%

7.0%

73.5%

72.8%

© Computer Engineering & Consulting Ltd. All rights reserved.

9.3%

16

Full-year earnings forecast for digital industry business◼ Net sales and operating income
FY ending Jan. 2023
Results for 3Q

Full-year forecast

Progress rate

Net sales12.3 billion yen

17.1 billion yen

72.0%

Operating income

2.8 billion yen

3.9 billion yen

71.9%

Net sales

3.6 billion yen

5.1 billion yen

71.2%

Digital Industry Business
Focused businessBusiness category
Smart factory
Connected services
Chubu district

Nishinihon district© Computer Engineering & Consulting Ltd. All rights reserved.

Point⚫ Strengthen SI by combining our products for production DX.
⚫ Focus on development of automated systems utilizing digital data.
⚫ Expand business negotiations for mobility services and IoT using cloud technologies.
⚫ Enhance environment construction services for DevOps including test automation.

⚫ Further expand areas of business negotiations for system development, which have beenfavorable due to enhanced DX promotion.
⚫ Find new demand from existing customers and new business negotiations for IoT-related
products and services as a whole.
⚫ Focus on acquiring new customers and business negotiations by expanding the area of logisticsrelated businesses.
17Full-year earnings forecast for service integration business◼ Net sales and operating income
FY ending Jan. 2023
Results for 3Q

Full-year forecast

Progress rate

Net sales

22.9 billion yen

30.9 billion yen

74.4%

Operating income

3.4 billion yen

4.6 billion yen

74.8%

Net sales

5.6 billion yen

6.9 billion yen

82.5%

Service Integration Business

Focused businessBusiness category

Service integration

Platform architect

Group companies© Computer Engineering & Consulting Ltd. All rights reserved.

Point⚫ Bring unprofitable projects under control, promote active DX business negotiations andproductivity improvement.
⚫ For services in cooperation with Microsoft Japan, continue focusing on expanding Dynamics 365
and Azure business.
⚫ For migration services, strengthen support for shifting to the cloud.
⚫ Meet demand for DX of government and public offices and local governments, and provide
integrated services from infrastructure construction to DC.
⚫ Promote support for companies in constructing a DX platform and support for cybersecurity
accompanying it.
⚫ Strengthen cooperation with customers (share nearshore development know-how).
18

Disclaimer✓ This document has not been prepared for the purpose of soliciting investments.
✓ Forward-looking statements in this document are based on judgments and assumptions madein light of trends in the Japanese economy and the information services industry, as well as
information available at the time of preparing this document. Accordingly, there is a possibility
that forecasts may fluctuate due to uncertainties inherent in them, changes in domestic andoverseas situations relevant to future business operations and other factors.

Contact:
E-mail:Computer Engineering & Consulting Ltd.
IR@cec-ltd.co.jp

19Company profile
Company Name

Computer Engineering & Consulting Ltd.
Computer Engineering &Consulting Ltd.

Number of
Employees

2,273 (as of April 1, 2022)

Date ofestablishment

February 24, 1968

8 companies

Date of Listing

April 2022 (Prime Market)
July 2001 (First Section of Tokyo Stock Exchange)

Consolidated
subsidiaries
Head Office

JR Ebisu Bldg., 5-5 Ebisu Minami 1-chome, Shibuya-ku, Tokyo 150-0022

Capital6,586 million yen

Representative Hitoshi Ooishi, Representative Director & President

Net sales

45,220 million yen (FY ended Jan. 2022)

Business

Licenses andapprovals◼ Stated in the list of companies providing system auditing Description
services, the Ministry of Economy, Trade and Industry◼ Stated in the list of companies providing information security
auditing services, the Ministry of Economy, Trade andIndustry◼ PrivacyMark-certified business operator 11820032(12)◼ JQA Certification• Quality Management System
ISO 9001:2015 (Certification No. JQA-1481)• Information Security Management System
ISO/IEC 27001 (Certification No. JQA-IM0007)• Cloud Service Information Security Management System
ISO/IEC 27017 (Certification No. JQA-IC0040)• Information Technology Service Management System
ISO/IEC 20000 (Certification No. JQA-IT0005)• Environmental Management System
ISO 14001:2015 (Certification No. JQA-EM7701)◼ Telecommunication engineering business, Minister of Land,
Infrastructure, Transport and Tourism (Ordinary-4) No. 28700(License date: November 21, 2022)© Computer Engineering & Consulting Ltd. All rights reserved.

◼ Digital Industry Business
Provides customers in the manufacturing industry with ICT services to support efficientbusiness operations, quality improvement, and production of attractive products.

◼ Service Integration Business
Provides integrated services from full support for the ICT lifecycle to the cloud andsecurity that are needed to reform and improve the operations of companies andorganizations
Two businesses contributing to the realization of a sustainable society

Total integrator for ICT

ICT partners specializing in manufacturing industry

Promoting ESG management and contributing to development of customers’ business through tackling social problems

Needs for ICT that are increasing owing to alteration
to a smart factory
Introduction of IoT and expansion of
PoC by customers

AI

Big data

IoT

Base to cooperate in in-house DC
and cloudSystems specializing in lines ofbusiness and operations

Technologies for AI, IoT, and sensing
Accumulating know-how on FA
control, robots, and equipment

Know-how on the whole ICT
infrastructure

Cloud

Robotics

Security

Defense against evolving menaces
to security

20Medium-term management plan (Reference material)
Vision 2025: To a Company That Creates the Futurewith ICT Technologies
1. Strengthening business capabilities
Increasing the areas of focused business from two to six

1. Strengthening business capabilities
Shifting to service-oriented business

2. Strengthening human resources and technical capabilities

Business growth
X
Personnel
assignment

Cultivating human resources

1. Strengthening business capabilities
Changing to an increase in the number of employees

A synergy of business across the whole company

Diversity and work-style reform

3. Strengthening management foundation
Promoting ESG activities

Target management
indices© Computer Engineering & Consulting Ltd. All rights reserved.

1. Strengthening
capabilitiesImproving the financial base and other matters
Promotingbusinessin- house DX

Net sales

Ordinary income

Ordinary income ratio

ROE/Payout ratio

56.0 billion yen

6.9 billion yen

12% or more

ROE: 12% or more
Payout ratio: 40% or more

21

Focused businesses
Company-wide sales 45.2 billionCorebusiness
34.8 billion

Focusedbusiness
10.4 billion
DigitalIndustry
Focusedbusiness

Digital Industry
Core business

Service integration
Core business

Focused Businesses: Business areas utilizing
their unique characteristics
Production
and logistics

A focused area that supports digitization
and DX strategy from production sites tologistics by adding LogiPull, a logistics
solution, besides product services for the
manufacturing industry.

Mobility

A focused area that develops services
utilizing car-mounted/traffic big data in theconnected field of the automotive industry.

Services incooperation
with Microsoft
Japan

A focused area that supports DX throughmanagement analysis and marketing
support for Dynamics 365/Azure base.

Migration

A focused area that supports legacy ICT
innovation, a cloud shift, and a DXcompliant environment for systems andapps.

Security

A focused area that conducts security
consulting, design, construction, andoperation services with a series of productsthat protect ICT factors connected to
networks from security threats.

DigitalIndustry
Business

Service
integration
Focusedbusiness

Service
Integration
Business

Cloud platform© Computer Engineering & Consulting Ltd. All rights reserved.

A focused area that promotes the cloud
platform of our products.

22